Toyota Woes Give Options to Dealers

Toyota Woes Give Options to Dealers

The problems faced by Toyota may be just what U.S. car companies need to boost sales and snare market share away from a competitor.
Toyota, the top selling vehicle manufacturer in the world, has been knocked to the mat over faulty brakes and sticky accelerators that resulted in a recall on some of its most popular brands of cars, crossovers and trucks, including the Prius hybrid and the luxury Lexus HS 250h.
In response, first General Motors Corp. later followed by the Ford Motor Co. began offering $1,000 incentives for buyers who come in with a Toyota trade in.
The safety problems has generated a fear among car owners so much so that even a Lexus owner came in recently to Galpin Ford in North Hills to trade in their 2010 vehicle for a Ford.
The dealership is stocking up on new models in anticipation of higher sales, said General Manager Terry Miller.
In addition to the $1,000 trade in, there are select customers who will be offered an additional $500 for buying a Ford.
“We have been contacting those customers and we have had a lot of calls from Toyota owners,” Miller said. “We’ve made a number of deals.”
Following a year in which the bottom fell out of vehicle sales and two of the Big Three filed for bankruptcy, the last thing the auto industry needed was more woes. This time though it was a foreign car company’s turn and one with a prized reputation of quality and forward thinking and the highest brand loyalty at that. While GM and Ford are offering the trade-in incentives the competition will likely not take it much further than that and take a more aggressive stance.
After all, last year when GM and Chrysler were taking federal bailout funds and decreased production, Toyota wasn’t publicly jumping with joy.
“They want to increase market share but they want to do it with good competitive products and not by denigrating anyone,”said Mark Rikess, of The Rikess Group, a Los Angeles-based consultancy for the auto industry.
Even Mark Reuss, president of GM’s North American division, acknowledged to reporters at the Chicago Auto Show that there will be opportunity for GM to get new customers but preferred winning on an even playing field.
Miller, of course, is betting on Ford to bring in the Toyota loyalists.
Bryan Weissman, a founder of auto brokerage firm DriveWise Auto in Tarzana, pointed out that the quality of Ford vehicles hasn’t been this high in a long time.
Toyota is one of the car companies that got a lot of interest from the clients served by Weissman and business partner Adam Slobin. The pair has fielded calls seeking advice from those shopping around for a new vehicle.
“We are happy to suggest alternatives,” Weissman said.
For instance, similar cars to the Camry are the Chevrolet Malibu and Nissan Altima, while for the Corolla there is the Honda Civic and the Nissan Sentra. The Veracruz and Sonata from Hyundai are other alternatives, Weissman said.
At Galpin, Miller recommends the Ford Escape over the Rav, the Focus for the Corolla and the Fusion for the Camry.
The change in consumer behavior that Toyota faces once it has emerged from the current difficulties is that loyal customers will have expanded the number of brands they will look at, Rikess said.
But when the timing is right, Toyota will come out swinging with a rebranding effort and possibly improving its warranties to meet or exceed that offered by Hyundai, considered the best in the industry, Rikess said. “It wouldn’t surprise me if Camry and Prius had exceptional pricing even for a short time,” he added.
Weissman foresees a temporary decline in Toyota sales and then a rebound once the troubled vehicles are fixed.
In the meantime, he pulls for the American car companies to capture some new customers. “While I respect all manufacturers equally it could be good for the economy if there is an uptick in the U.S. brands,” Weissman said.